- Flexibility: Subscribers has control over the choice of asset class (Active or Auto choice) and the Pension Fund Managers (PFMs) or Pension Funds who manages the investments. Subscribers can switch the Pension Fund once in year and the investment option or asset class twice in a year.
- Dual benefit of Low Cost and Power of compounding: NPS carries the benefit of being the lowest cost pension product in the world. The overall costs in NPS are the lowest due to economies of scale in operations of the system architecture.
Also, accumulation of the retirement corpus over a period of time gets accelerated on account of the compounding effect and nominal charges borne by the subscriber.
- Tax benefits:
(a) On subscriber’s contribution: Own contributions are eligible for tax deduction u/s 80 CCD (1) upto 10% of basic + DA or up to 20% of Gross Income for self-employed within the overall ceiling of Rs. 1.50 Lacs u/s 80 CCE
(b) On employer’s contribution: Contributions made by employer are allowed as deduction u/s 80CCD(2) while computing total income of the employee. However, the amount of deduction is restricted to 14% of salary in case of Central Govt. employees and 10% in any other employees (otherwise 20% of gross total income).
NPS provides additional tax benefit u/s 80CCD 1(B) on contribution in NPS account subject to a maximum investment of Rs 50,000. Thus, investing in NPS, a subscriber can get a tax benefit of Rs two lakhs (1,50,000+50,000).
- Safety (Regulated & Monitored): NPS is regulated by Pension Fund Regulatory and Development Authority (PFRDA) which is established through a statute. PFRDA prescribes the investment norms and monitors the performance of the entire system.
- Simple and transparent: NPS is simple to open and operate. A subscriber can open an account with any one of the Point of Presence or through eNPS and get a Permanent Retirement Account Number (PRAN).
- Portable: The NPS account (PRAN) is unique and the subscriber can transfer the pension account across employment and locations while changing his/her employer or on relocation.
- Online Access: Subscriber can access and operate the pension account online through web based interface or through the mobile application.
From - Pension Fund Regulatory and Development Authority (PFRDA)